Fairfax resists Rinehart board push

Fairfax Media chairman Roger Corbett says the company is resisting giving mining magnate Gina Rinehart seats on the board because it is concerned about the interests of all shareholders.

Mr Corbett told the Fairfax annual general meeting today that he welcomed Ms Rinehart’s presence as a major shareholder, but said the board could not find a way to accommodate her request for two board seats.

‘‘We welcome very much her 14-plus per cent holding in this company. Mrs Rinehart has made a distinguished contribution to the resources of this country,’’ Mr Corbett told the meeting in Melbourne. ‘‘The board would like to find a way to accommodate the representation there and has worked very hard to do so.

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‘‘But arriving at this position the board needs to have regard for the rights, benefits and interests of shareholders. This has not been a Roger Corbett issue, it’s been a board issue. The board is absolutely unanimous on this position.’’

Mr Corbett said a representative for Mrs Rinehart, Hancock Prospecting chief development officer John Klepec, was expected to address the meeting.

Earlier, Fairfax chief financial officer Brian Cassell said the number of mastheads in Fairfax’s 220-strong stable that had a zero valuation was ‘‘in the tens’’ but said there were no plans to sell them.

All options on the table

Mr Corbett said the troubled company was not ruling any options out when it comes to trying to turn around its business.

He said he and the board were acutely aware of anxiety about the slide in Fairfax shares to record low levels.

But, he said, the strategic review the company was undertaking would help it ride out tough trading conditions and the structural changes being made at Fairfax, publisher of this website.

‘‘However, let there be no doubt, we will continue to examine all alternatives to optimise shareholder value, and we rule nothing out,’’ he said. ‘‘We remain opportunistic and flexible with respect to value-enhancing transactions.’’

Mr Corbett echoed comments made on Tuesday by chief executive Greg Hywood about Fairfax having walked away from ideas like breaking up the company through asset sales and a demerger of the Metro Media business.

He said it was the wrong time to make such changes and the company instead had decided to focus on a major restructure that included cutting 1900 jobs and the closure of its major metropolitan printing presses.

That restructure was expected to reap annual savings of more than $235 million, he said.Fairfax has suffered a disastrous year in which it reported a $2.73 billion loss for 2011-12 as a result of massive value writedowns on its newspaper mastheads, and its share price has fallen to a record low of around 37.7 cents.

Mr Corbett said he understood how disappointed shareholders would have been by the $2.7 billion writedown of the value of the company’s intangible assets.

He said there could be more impairment charges on the way, but added that some that were expected could also end up being reversed.

Remuneration report supported

On the issue of executive pay, Mr Corbett said 81 per cent of shareholder proxy votes received before the meeting supported the company’s remuneration report.

The Australian Shareholders’ Association (ASA) has said it plans to vote against the report, arguing that the board has ‘‘presided over substantial destruction of shareholder value’’, so board fees should be cut.

The ASA said Mr Corbett’s pay of $432,730 for 2011-12 ‘‘appears excessive, especially considering he only owns just under 100,000 shares in the company’’.

Fairfax chief executive Greg Hywood gave up half of his $840,000 bonus for 2011-12, citing the problems facing the company, cutting his salary package for the year to $2.36 million.

Mr Corbett said directors were conscious of suggestions made in regards to executive pay at Fairfax and they would be considered when developing future remuneration packages.

Outlook starting to improve

Mr Hywood told shareholders there were signs that the downturn in revenues during the year to June 30, 2012, had begun to improve.

While revenues for the first six weeks of the 2012-13 financial year had been 10 per cent lower than the previous corresponding period, they had improved in September and October.

Revenues for those two months were 7.5 per cent behind the corresponding weeks in the previous financial year.

‘‘It is impossible to make projections from here, but we will keep the market informed as the year unfolds,’’ he said.

Mr Hywood said Fairfax had a clear strategy to negotiate its way through a ‘‘perfect storm of cyclical weakness and structural change’’.

‘‘Let’s not kid ourselves,’’ he said. ‘‘There are challenges ahead.’’

But, he said, Fairfax would not ‘‘hide behind a cloak of denial’’ nor be too sentimental about the company’s past when it came to transforming its operations to embrace digital media.

He said $235 million in costs were being stripped out of the business to help make Fairfax a 21st century multi-media platform company.

However, he said, print editions of newspapers, including The Sydney Morning Herald and The Age, would continue ‘‘as long as there is profitable demand for them’’.

Fairfax shares shot up on Mr Hywood's comments and were recently trading 7 per cent higher at 40.5 cents.